Tuesday, February 09, 2010

How the Mighty Fall

After Jim Collins' landmark Good to Great, now an essential for most organizations, the collapse of a number of those 'great' companies made Collins re-examine, how companies can fall after decades of unshakable excellence.

What began as a journal article eventually expanded to How the Mighty Fall, which confronts these questions with some answers to how even the best can succumb to decline and collapse. One thing is even more true about the recent financial collapse: all organizations are prone to vulnerabilities, regardless of how well crafted and seemingly operated they appear. Collins' research project--more than four years in duration-- reveals five stages of decline. It's an excellent guide to libraries and information centres, particularly those nestled in the guise of large budgeted institutions. All organizations run by humans face mortality one day or another - it's important that we recognize its symptoms and confront the brutal realities of decline. And perhaps step in if it's not too late. Here are Collins' five stages:

Stage 1: Hubris Born of Success - All success depends on hard work and luck; however, success does not guarantee perpetuity. Every decision needs to be continually re-examined.

Stage 2: Undisciplined Pursuit of More - Success often breeds greed, which often leads to straying from the original elements which produced success.

Stage 3: Denial of Risk and Peril - Greed leads to blindness that there are signs of hazard, until it's too late.

Stage 4: Grasping for Salvation - Signs of failure arises, but blindness to reality reinforces the need to look for miracles. Often, the organization looks for a messiah from outside the organization to lead it back to the promise land.

Stage 5: Capitulation to Irrelevance or Death - Nothing is done. Demoralized, the organization accepts its fate of a slow death.

Collins' research argues however, that these are just five stages. Indeed, they are reversible. Some companies do indeed recover--in some cases, coming back even stronger--even after Stage 4. In fact, this is because decline is (believe it or not) self-inflicted, and the path to recovery lies largely within the organization's own hands. As long a company is not entirely knocked out of the game, hope always remains. The mighty can fall, but they can often rise again.

Collins' book impressed me as a book that can be applied to all organizations, profit and not-for-profit - technology or customer-service. Regardless of what sector, when large numbers of people work together to achieve a common goal, they are bound to irrationality and group think, politics and human egotism. The five principles of decline are a good reminder that nothing is indestructible if pushed to its limits.

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